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MLPs Fell by 0.2% in the Week Ended August 12: Key Highlights

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MLPs Fell by 0.2% in the Week Ended August 12: Key Highlights PART 1 OF 6

Natural Gas Fell 6.7% in the Week Ended August 12

US natural gas

NYMEX near-month Henry Hub natural gas futures contracts fell by 6.7% in the week ended August 12, 2016, to close at $2.59 per MMBtu (million British thermal units). 

Prices fell by 3.6% in the previous week, closing at $2.77 per MMBtu. US natural gas (UNG) fell during the week due to oversupply concerns.

Natural Gas Fell 6.7% in the Week Ended August 12

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According to the weekly report by the EIA (U.S. Energy Information Administration), US natural gas stocks posted a net injection of 29 Bcf (billion cubic feet) for the week ended August 5 compared to the five-year average injection and last year’s net injection of 53 Bcf and 57 Bcf, respectively.

This resulted in a slight fall in the natural gas surplus compared to the five-year average. The fall in net injection was due to strong demand from power utilities. Higher natural gas demand from power utilities benefits MLPs such as Enable Midstream Partners (ENBL) and Boardwalk Pipeline Partners (BWP).

The above graph shows the weekly near-month natural gas futures prices at Henry Hub, the national benchmark for US natural gas prices.

Impact on MLPs

There are two ways that natural gas prices impact energy MLPs:

  • Directly: This is mostly relevant for MLPs involved in natural gas sales, gathering, and processing.
  • Indirectly: Sustained low prices impact production and thus natural gas throughput volumes. At the same time, low natural gas prices lead to higher demand from utilities and industrial customers. BWP’s operating performance has been negatively impacted by production-related shut-ins.

What we’ll cover in this series

Monitoring MLP sector indicators can help investors to understand MLPs’ performances. It can also help investors to predict MLPs’ future performances.

This weekly series will keep you updated on the latest developments in the MLP energy sector. We’ll cover movements in key indicators that impact MLPs’ performances to help you make informed decisions about your investments.

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